To date, it has been thought that cannabinoid receptors in CNS are primarily of the CB1R subtype, with CB2R expressed only in glia and peripheral tissues. However, evidence for the expression of CB2 type cannabinoid receptors at neuronal sites in the CNS is building through anatomical localization of receptors and mRNA in neurons and behavioural studies of central effects of CB2R agonists. In the medial entorhinal area of the rat, we found that blockade of CB1R did not occlude suppression of GABAergic inhibition by the non-specific endogenous cannabinoid 2-AG, suggesting that CB1R could not account fully for the effects of 2-AG. Suppression could be mimicked using the CB2R agonist JWH-133 and reversed by the CB2R inverse agonist AM-630, indicating the presence of functional CB2R. When we reversed the order of drug application AM-630 blocked the effects of the CB2R agonist JWH-133, but not the CB1R inverse agonist LY320135. JTE-907, a CB2R inverse agonist structurally unrelated to AM-630 elicited increased GABAergic neurotransmission at picomolar concentrations. Analysis of mIPSCs revealed that CB2R effects were restricted to action potential dependent, but not action potential independent GABA release. These data provide pharmacological evidence for functional CB2R at CNS synapses.